This video intends to provide as much value to you as quickly as possible. It is not an exhaustive list but will give you lots of practical ways to increase your property profits.
Profit is a function of increasing revenue and reducing cost and in property, I work on these 4 principles:
1. Maximise rent
2. Maximise occupancy
3. Minimise unnecessary cost
4. Minimise management time
In terms of rent, you need to present your property that will be attractive, at the level of rent you want,
There will be a ceiling price that tenants are prepared to pay for a type of property in a particular area, no matter how well your property is presented.
Maximising occupancy is very important often more important than the amount of rent you charge.
For example, if you push the rent of your property to £800 per month but incur a 1-month void, you have lost £800, if you reduce the price to £750 per month but don’t have a void, you have only lost £50 per month or £600 per year.
In terms of cost, we can think of cost in 2 ways: Firstly, the money you spend…
There is a balance to strike between spending money on your investment property to make it more attractive to your customers and the amount of rent you can charge for your property.
And if you don’t spend money on essential maintenance and general upkeep and decoration, your property will suffer, and you will not achieve the best rent and start to incur expensive void periods.
Conversely, you need to avoid unnecessary spending on things that your tenants may not value or things that don’t allow for a rent increase.
Secondly, the cost is thought of in terms of the time spent managing your property. While your time may not involve a cash outlay it is important to appreciate the value of your time and realise there is an opportunity cost to spending time managing your property, as you can always be doing other things instead.
1 – INCREASE RENT –
Let’s look at increasing rent and ask 2 questions…
1 – Can you charge more rent for Your Property?
The more rent you charge for your property, the more profit you can make. Given your properties size and location, it will have a ceiling price that tenants are not prepared to pay over.
If you charge at or above the top price, and your customers do not see the value, you risk having void periods.
Conversely, sometimes, landlords undercharge for an extended period, so miss out on lots of rent.
To avoid this, consider adding an annual rent increase, in line with inflation, into the tenancy agreement.
2 – How can you Improve Your Property to charge more rent?
You must keep your property safe and free from health hazards. Spending money to do this is a must.
Beyond the health and safety aspects, you can invest money to improve your property to reduce the chance of void periods and achieve a higher rental price.
It is essential to know what rental price uplift you may get. Then you can make your assessment if the investment is justified.
For example, you may identify an improvement, that you expect will achieve a £100 rent increase per month.
Over 12 months, that is £1,200, and over 5 years, that is £6,000.
Spending £6,000 to achieve this uplift may be justified, but spending £20,000 may not be from a return-on-investment perspective.
Improvement that could increase your rental price includes:
· Great decoration
· Better use of existing floor space
· Add a conservatory
· Create a driveway to allow parking
· Replace kitchen
· Extend kitchen or make open plan
· Replace bathroom
· Add En-suite
· Convert garage into living space
· Add bedrooms by reconfiguring floor space or convert cellar or loft
· Improve the garden
· Improve exterior
· Install new windows
Which of these improvements will add to the desirability and rental price of your property?
